What is The Difference Between Gaming (Gambling) and Investing?

The answer is simple, understanding.

By Jason Fittler

Investing, especially in the stock market is often compared to gambling, this is due to a lack of understanding about how the stock market works.

Education is the key to success.

If you understand how a process or product works you are better equipped to achieve the maximum benefit from that process or product. Investing is no different. Most investors only focus on the end result, being rich, and never on the process of how to become rich. They see investing as a black box, you put money in and you get more back. This could not be more further from the truth, investing in shares is more real then investing in property.

I hear people say, property is safer, you can see it touch and feel it. Shares are the same, the companies you invest in you can also feel and see and you do this every day.

Think of it this way, you can buy shares in Woolworths or NAB; these are real companies which I see, touch and talk to every week. Not only that I can see how they are performing talk to staff, touch the building they are in.

Next time you are in a Woolworths check out line, feeling a little annoyed about the wait, look around, see all those other people waiting in line; they are all spending money in a business I own shares in. A little bit of that money is coming my way. That’s why I am the guy smiling while waiting in line.

To create real wealth you need to understand how the investment markets work, you need to be educated about investments. Once you understand this you will truly be on the path to creating untold wealth. There are some fundamental rules when investing. My favourites are:

1. If you do not understand what they do, do not invest.
2. Know when to sell; selling your shares is more important then buying.
3. You make your money when you buy.

Summary

If you understand your investments and are educated, then investing is nothing like gambling.

However, if you are simply buying shares on the latest hot tip from a friend or what you read in the paper, then yes you are gambling.

If you want to gamble then I recommend the Tabcorp Casinos that way the gains are tax free and as I am a shareholder some of your money will end up in my pocket.